Consulate Pitches Ukraine as Outsourcing Destination in Spite of Conflict

As fighting in the Ukraine intensified Wednesday, the Ukraine consulate and members of the country’s IT community were in San Francisco trying to convince a sparsely attended event hall that the region remains a viable source for outsourcing.

“The government of Ukraine expects that exports revenue from the IT outsourcing industry to grow from $2 billion in 2013 up to $10 billion by 2020,” said Oleksandr Krotenko, consul on economic affairs at the Consulate General of Ukraine in San Francisco.

Few of the companies invited to the event, held at the elegant Fairmont Hotel, perched on top of San Francisco’s Nob Hill, actually attended. About 40 people were there--approximately half the number that was expected, judging by the empty chairs and unused name badges. But Ukraine outsourcing firm SoftServe Inc., one of the organizers of the event, said that its outsourcing efforts have been successful.

The company, whose largest client is Cisco Systems, said it had recently posted its best quarter ever in terms of revenue. The company’s Ukrainian location, in the western city of Lviv, is about 800 miles from the area where rebels are fighting. SoftServe said companies can be confident their work will be completed despite geopolitical circumstances.

SoftServe, along with embassy officials and Internet firm KMGi Group, which offers an online service called TransparentBusiness.com to help companies better monitor the work of remote employees first began a campaign, April 29, to appeal to Western businesses to support outsourcing as a way to stave off a “new Cold War.”

KMGi CEO Alex Konanykhin’s stake in the Ukraine effort is both business and personal. Born in the Soviet Union, he became a successful serial entrepreneur during the era of Perestroika. In 1992, his relationship with the government deteriorated when he was kidnapped by the KGB on a business trip to Budapest, he said. His business assets were seized by the Russian government, he said. He escaped and flew to the U.S. and has since started several Internet companies.

After the Russian annexation of Crimea began, Mr. Konanykhin said he volunteered his services to the Ukrainian Embassy. “If Russia had attacked Finland, I would have volunteered my services to the Finnish Embassy,” he told CIO Journal.